Economy, Domestic Economy
0

Implications of Turkey-Russia Tension for Iran Trade

Implications of Turkey-Russia Tension for Iran TradeImplications of Turkey-Russia Tension for Iran Trade

As much as escalating tensions between Ankara and Moscow in the wake of Turkey downing Russia’s fighter jet came as a shock to Turkish traders, it was seen by some as an opportunity that could benefit Iranian businesses, setting the stage for a hike in bilateral trade with the northern Caspian neighbor.

On November 24, the Russian Su-24, an all-weather attack aircraft, was shot down by Turkish F-16s’ air-to-air missile in the Turkey-Syria border area.

The Associated Press earlier reported that Russia plans to retaliate by imposing sanctions, cutting economic ties and scrapping major investment projects.

Kremlin immediately restricted tourism, left Turkish trucks stranded at the border and confiscated large quantities of Turkish food imports. Russian Prime Minister Dmitry Medvedev ordered his government to also draft sanctions against Turkey within two days in response to what he described as an “act of aggression” against Russia.

The sanctions include restrictions and bans on Turkish economic structures operating in Russian territory, restrictions and bans on deliveries of products, including foodstuffs, as well as on labor and services.

The steps threaten billions of dollars of trade, as Russia is the largest destination of Turkey’s exports and the two countries are bound by plans for a new gas pipeline and strong trade in food and tourism.

As recently as in September, Turkish President Recep Tayyip Erdogan had met his Russian counterpart and predicted a tripling of bilateral trade to $100 billion in the next eight years.

Nevertheless, some believe the sorry state of affairs between the two states will do little to help them reach the target as the situation will benefit Iran’s trade with the Eurasian country.

Head of Iran-Russia Chamber of Commerce Asadollah Asgaroladi on Sunday said Iran could use Moscow’s newborn unwillingness to participate in economic activities with Turkey as an opportunity to increase trade with Russia.

According to Asgaroladi, Iran could increase trade with Russia from the current $1.6 billion to $3 billion in the next four months.

“We currently export $450 million worth of goods to Russia. Once barriers are removed, we could certainly increase the figure by twofold,” he told the Persian daily Forsat-e Emrooz.

Transportation and banking transactions, he says, are still a matter of discussion between the two countries. Heavy tariff duties levied on Iranian products by Russia is another major impediment to increasing exports.

Since Russia offers zero-tariff on items it imports from its neighboring countries, Iranian goods are first transferred to one of these countries and then dispatched to Russia. The approach is not favorable for Iranian exporters.

This is while, according to Asgaroladi, in the 12th meeting of Iran-Russia Economic Commission held in Moscow on November 12, both sides decided to remove obstacles to bilateral trade within 50 days.

Iran’s Minister of Communications and Information Technology Mahmoud Vaezi and Russia’s Energy Minister Alexander Novak, who jointly chaired the session, signed several agreements on energy, maritime and banking cooperation.

The two sides also pledged to boost bilateral trade based on a roadmap devised after three-day marathon talks among 60 representatives from Iran’s public and private sectors and their Russian counterparts.

Financialtribune.com